After Leaping 26% Blue Jet Healthcare Limited (NSE:BLUEJET) Shares Are Not Flying Under The Radar

Despite an already strong run, Blue Jet Healthcare Limited (NSE:BLUEJET) shares have been powering on, with a gain of 26% in the last thirty days. The annual gain comes to 126% following the latest surge, making investors sit up and take notice.

Since its price has surged higher, Blue Jet Healthcare may be sending very bearish signals at the moment with a price-to-earnings (or "P/E") ratio of 55.9x, since almost half of all companies in India have P/E ratios under 29x and even P/E's lower than 17x are not unusual. Although, it's not wise to just take the P/E at face value as there may be an explanation why it's so lofty.

Recent times have been advantageous for Blue Jet Healthcare as its earnings have been rising faster than most other companies. It seems that many are expecting the strong earnings performance to persist, which has raised the P/E. If not, then existing shareholders might be a little nervous about the viability of the share price.

Check out our latest analysis for Blue Jet Healthcare

If you'd like to see what analysts are forecasting going forward, you should check out our free report on Blue Jet Healthcare.

Is There Enough Growth For Blue Jet Healthcare?

The only time you'd be truly comfortable seeing a P/E as steep as Blue Jet Healthcare's is when the company's growth is on track to outshine the market decidedly.

Taking a look back first, we see that the company grew earnings per share by an impressive 34% last year. EPS has also lifted 29% in aggregate from three years ago, mostly thanks to the last 12 months of growth. Accordingly, shareholders would have probably been satisfied with the medium-term rates of earnings growth.

Looking ahead now, EPS is anticipated to climb by 41% during the coming year according to the four analysts following the company. With the market only predicted to deliver 25%, the company is positioned for a stronger earnings result.

With this information, we can see why Blue Jet Healthcare is trading at such a high P/E compared to the market. Apparently shareholders aren't keen to offload something that is potentially eyeing a more prosperous future.

The Key Takeaway

Blue Jet Healthcare's P/E is flying high just like its stock has during the last month. Using the price-to-earnings ratio alone to determine if you should sell your stock isn't sensible, however it can be a practical guide to the company's future prospects.

As we suspected, our examination of Blue Jet Healthcare's analyst forecasts revealed that its superior earnings outlook is contributing to its high P/E. At this stage investors feel the potential for a deterioration in earnings isn't great enough to justify a lower P/E ratio. It's hard to see the share price falling strongly in the near future under these circumstances.

The company's balance sheet is another key area for risk analysis. Take a look at our free balance sheet analysis for Blue Jet Healthcare with six simple checks on some of these key factors.

If you're unsure about the strength of Blue Jet Healthcare's business, why not explore our interactive list of stocks with solid business fundamentals for some other companies you may have missed.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.